Global e-invoicing compliance

E-invoicing (short for “electronic invoicing”) is the digital process of creating, sending, receiving, and processing invoices between businesses (B2B) or between businesses and government entities (B2G). This new electronic method replaces the traditional paper-based or digital invoicing system with a structured electronic format, opening the door to innovation with technology and automation.

E-invoicing is becoming increasingly popular worldwide due to its numerous advantages, including efficiency, accuracy, transparency, and enhanced security. A growing number of governments are mandating or incentivizing businesses to switch to electronic invoicing methods, both to promote digitalization and combat tax evasion.

CTC involves the real-time monitoring and reporting of transactions, providing tax administrations with enhanced capabilities to combat VAT fraud and improve tax collection. This shift towards CTC has led to the implementation of e-invoicing, which enables businesses to exchange structured invoice data electronically and replaces traditional paper-based or digital invoices.

The introduction of e-invoicing mandates has reshaped VAT compliance by enforcing stricter reporting standards and requiring digital processes for real-time invoice validation and automated data submission to tax authorities.

Companies need to adapt their compliance strategies and potentially restructure existing processes to meet the demands of automation and increased tax audits.

Under e-invoicing mandates, the following types of transactions typically fall within the scope:

• Business to Business (B2B) domestic transactions: These are transactions that occur between two businesses within the same country. E-invoicing mandates often require businesses to electronically exchange structured invoice data for B2B transactions.
• Business to Business (B2B) inter-company transaction: These are transactions that occur within a corporate group. These transactions are impacted by transfer pricing agreements and are subject to the same e-invoicing requirements as other B2B transactions. To date, this is required where domestic VAT groupings are not possible. In 2028, legislation is expected to address cross-border transactions and their subjectivity to e-invoicing.
• Business to Government (B2G) domestic transactions: These are transactions between businesses and government entities within the same country. E-invoicing mandates typically require businesses to submit electronic invoices to government agencies for B2G transactions.
• Business to Consumer (B2C) domestic transactions: It is less common than the other transaction types, but it has started being used by Tax Authorities. B2C transactions, which involve sales to individual consumers, are typically not subject to e-invoicing requirements, subject to future regulatory changes.

• Standard invoices: These are the most common type of e-invoice that businesses use to request payment from their customers.
• Credit notes: E-invoicing can also be used for credit notes, which are issued when a refund or adjustment is required for a previously issued invoice.
• Debit notes: Debit notes are issued when additional charges need to be applied to an existing invoice. E-invoicing can also be used for these types of invoices.
• Proforma invoices: Proforma invoices are preliminary invoices that are issued before the actual goods or services are delivered. E-invoicing can be used to issue proforma invoices as well.
• Electronic billing statements: Some businesses use e-invoicing to send electronic billing statements to their customers on a periodic basis, summarizing all the invoices and payments made during a specific time period.
• Self-billing invoices: An agreement between supplier and customer where the customer is authorized to generate invoices on the supplier's behalf.